Reduncancies continue at Royal Imtech as part of the major restructuring program announced in April 2013, while the Netherlands-headquartered Group is currently negotiating with its most important financiers on its financing agreements.

At the end of Q3 2013, 1,355 employees have now been made redundant – with the program being extended in particular in Germany, Nordic, Eastern Europe and Marine. Royal Imtech is now expecting around 2,250 redundancies in total.

The news comes with the publication of Royal Imtech’s latest results for the third quarter of 2013, which show Group revenue of €1,256 million - a fall on its second quarter figure of €1,274 million.

During the first nine months of 2013, the Group said the order intake of €3,628 million continued to be satisfactory and in line with revenue of €3,741 million The Group attributed lower order intake than revenue in the UK & Ireland to “a weak engineering services market in the UK’ and high production levels at projects in Kazakhstan.

However, Royal Imtech said that overall, operational performance in the ICT, Nordic and UK & Ireland divisions is at a satisfactory level. Revenue for UK & Ireland amounted to €188.6 million euro in Q3, where the businesses in water, waste and energy and the international businesses were flagged up as providing opportunities to off-set the weak UK market for engineering services. Last month Royal HaskoningDHV and Imtech announced that they would jointly build between five to eight innovative Nerada®wastewater treatment installations in the UK.

The orde r intake in Germany & Eastern Europe was lower than revenue during the first nine months.

Royal Imtech said it had now largely completed and extended its restructuring program announced earlier this year. However, the operational recovery in Germany requires more time with further additional restructuring announced.

Gerard van de Aast, CEO at Royal Imtech said:

'Operational performance in most of our divisions is satisfactorily or recovering, also helped by the largely completed restructuring program. However recovery of our German business will take more time. Overall order intake has continued to be satisfactorily and tracks revenue. Good progress has been made in working capital management, the swift implementation of the restructuring plans, management upgrades and strengthening of business controls. We are in a constructive dialogue regarding a covenant reset. This will give the company time to improve its operational performance.'

Imtech is currently engaged in a dialogue with its most important financiers regarding an amendment of its financing agreements, including a covenant reset. The covenant reset is required as a result of a slower than anticipated recovery of Imtech's business, in particular in Germany.

Imtech expects to publish the reset covenants on or before the publication of its annual results on March 18th 2014.

Operational recovery in Germany will take more time

In Germany, Imtech said the new management team put in place under the leadership of Felix Colsman had started to rebuild the business, describing Germany as a strong market where it could build on a good reputation and market leadership position. However, the Group commented:

“Our German business is trading weaker than assumed as by now the full inefficiencies due to prior management have become visible. Cost reduction and upgrading of the organization will address the issues and have already started. “

More redundancies will now be implemented in Germany, with an additional restructuring program planned for 2014 to reduce the cost base further. In addition to the redundancies already announced, a general cost savings program (including stopping sponsoring activities) of €40 million covering 2013-2015 is underway.

In Eastern Europe and in particular in Poland, the businesses are in process of restructuring with around 230 redundancies. The Nordic business will restructure with 240 redundancies.

Total cost in 2013 of the restructure programs is now estimated at around €90 million euro up from the earlier €80 million estimate with an average payback time of 15 months. The Group said that the cost saving benefits from the redundancies would become visible in coming periods.